Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

306. Telegram From the Mission in Geneva to the Department of State¹

Geneva, December 8, 1965, 1817Z.

TAGG 3674. Subject: GATT cotton textiles committee meeting, December 7. Ref: TAGG 3667.²

1. US statement presented, no comment followed immediately.

2. Spain: Emphasized need for increased flexibility and strict adherence to LTA procedures by importing countries. Interpreted U.S. statement as indication willingness to discuss Spanish proposals for changes in bilateral agreement. Re UK proposals, GOS considers completely out of keeping with spirit and letter of LTA and requested negotiation for bilateral.

3. Korea: Principally concerned with low levels of restraint applied for equity reasons to new starters like Korea in categories where other large suppliers are under restraint. Proposed that no restraints be imposed against countries whose exports low in relation to size of market in importing country and that no restraints be imposed in trade in made-up goods (apparel). Considers U.K. global quota proposal favorable for new-starters provided (a) all countries within global quota treated equally, or (b) separate global established for non-Commonwealth exporters. Korean delegates in private conversation with USDel reiterated these views and also enquired about WW package deal, with which they were not informed.

4. China: Cited decline in exports due to import quotas, self-sufficiency of LDC’s, competition from man-made fiber textiles. Reiterated Korean views on low levels applied to new starters. Other problem is classification differences; suggested need for a universal classification system. Also proposed periodic review of factors to determine market disruption and 30 percent flexibility within aggregate limits. Emphasis of criticism was more on specific technical problems than LTA as whole.

5. Canada: Willing support realistic proposals to extension LTA. Cited its good record on imports from LDC’s. Called attention to (1) long delays in negotiating bilaterals; (2) failure of definition of cotton textile in Article 9 to take account of blends less than 50 percent by weight cotton which directly competitive with cotton products and produced by some industry. GOC intends raise these problems bilaterally; (3) need for relaxation of restrictions by other importers.

6. Pakistan: GOP, highly critical of performance under LTA using GATT study data, concluded that (1) export growth rate of LDC’s is declining, (2) modernization of textile industries in importing countries means special protection and severe restrictions no longer needed. Suggested industrialized countries vacate part of cotton textile markets for benefit LDC’s. (3) LTA has not resulted in growth of cotton textile exports from LDC’s. However expressed willingness join in WW sector discussions if other countries preferred combine Art. 8 (d) and Kennedy Round negotiations, but not willing give up right to propose amendments to LTA and wants all elements of problem, including amendments to LTA, left open for negotiation. Pakistan requires assurances that greater access will result from extended LTA, not just vague promises. Reserved on UK proposal indication it should be discussed after completion of major review.

7. India: Expressed agreement with Pakistan on adverse effects of LTA on LDC’s. Additional point is that modernization of textile industry in industrialized countries and rapid development of man-made fiber textiles are threatening competitiveness of LDC’s. Cited increased value exports by EEC including intra-Community; high level US exports despite recent decline; EEC imports from Eastern bloc; increases in imports from non-participants to detriment of LDC participants. Observed that industrialized countries had not made structural adjustment in their industries to permit greater LDC share in market, Article 3 restrictively applied, and objectives of LTA frustrated. Concluded that if importing countries want LTA extended, these countries must give assurance on liberalized access. Suggested meeting on this subject early 1966.

8. In addition to above, Austria, Turkey, Sweden, and Norway made statement. These countries generally favored extension of LTA, but Turkey and Sweden did not foreclose possibility of amendments.

9. At conclusion, WW reiterated proposal in his opening speech that consideration be given to measures for increasing trade among Group II countries.

Tubby

1. Source: Department of State, Central Files, INCO–COTTON GATT. Limited Official Use. Repeated to Bonn, Brussels for USEC, The Hague, Kingston, London, Madrid, New Delhi, Paris for USOECD, Rawalpindi, Rome, and Tokyo.
2. Dated December 7. (Ibid.)